PRESIDENT Claudia Sheinbaum said Mexico could retaliate with its own tariffs on Tuesday, after US President-elect Donald Trump threatened to impose 25 per cent import duties on Mexican goods.

Mr Trump said he was making the threat to force Mexico to stop drugs and migrants from flowing across the border.

Ms Sheinbaum said she was willing to engage in talks on the issues, but drugs were a US problem.

“One tariff would be followed by another in response and so on, until we put at risk common businesses,” Ms Sheinbaum said, referring to US car makers that have plants on both sides of the border.

She said Mexico had done a lot to stem the flow of migrants, noting “caravans of migrants no longer reach the border.”

President Sheinbaum added that Mexico was suffering from an influx of weapons smuggled in from the US and the flow of drugs was “a problem of public health and consumption in your country’s society.”

She also criticised US spending on weapons, saying the money should instead be spent regionally to address the problem of migration. 

“If a percentage of what the US spends on war were dedicated to peace and development, that would address the underlying causes of migration,” she said.

President Sheinbaum, who took office on October 1, insisted: “We negotiate as equals, there is no subordination here, because we are a great nation. 

“I think we are going to reach an agreement.”

Car plants on both sides of the border rely on each other for parts and components, meaning some production lines could screech to a halt if a trade war began.

“It is unacceptable and would cause inflation and job losses in Mexico and the United States,” President Sheinbaum said, while offering to talk about the issues. 

She said: “Dialogue is the best path to achieve understanding, peace and prosperity for our two countries.

“I hope our teams can meet soon.”